1 MONGOLIA MARKS CENTENNIAL WITH A NEW COURSE FOR CHANGE WWW.EASTASIAFORUM.ORG PUBLISHED:2024/12/20      2 E-MART OPENS FIFTH STORE IN ULAANBAATAR, MONGOLIA, TARGETING K-FOOD CRAZE WWW.BIZ.CHOSUN.COM PUBLISHED:2024/12/20      3 JAPAN AND MONGOLIA FORGE HISTORIC DEFENSE PACT UNDER THIRD NEIGHBOR STRATEGY WWW.ARMYRECOGNITION.COM  PUBLISHED:2024/12/20      4 CENTRAL BANK LOWERS ECONOMIC GROWTH FORECAST TO 5.2% WWW.UBPOST.MN PUBLISHED:2024/12/20      5 L. OYUN-ERDENE: EVERY CITIZEN WILL RECEIVE 350,000 MNT IN DIVIDENDS WWW.GOGO.MN PUBLISHED:2024/12/20      6 THE BILL TO ELIMINATE THE QUOTA FOR FOREIGN WORKERS IN MONGOLIA HAS BEEN SUBMITTED WWW.GOGO.MN PUBLISHED:2024/12/20      7 THE SECOND NATIONAL ONCOLOGY CENTER TO BE CONSTRUCTED IN ULAANBAATAR WWW.MONTSAME.MN PUBLISHED:2024/12/20      8 GREEN BOND ISSUED FOR WASTE RECYCLING WWW.MONTSAME.MN PUBLISHED:2024/12/19      9 BAGANUUR 50 MW BATTERY STORAGE POWER STATION SUPPLIES ENERGY TO CENTRAL SYSTEM WWW.MONTSAME.MN PUBLISHED:2024/12/19      10 THE PENSION AMOUNT INCREASED BY SIX PERCENT WWW.GOGO.MN PUBLISHED:2024/12/19      КОКС ХИМИЙН ҮЙЛДВЭРИЙН БҮТЭЭН БАЙГУУЛАЛТЫГ ИРЭХ ОНЫ ХОЁРДУГААР УЛИРАЛД ЭХЛҮҮЛНЭ WWW.MONTSAME.MN НИЙТЭЛСЭН:2024/12/20     "ЭРДЭНЭС ТАВАНТОЛГОЙ” ХК-ИЙН ХУВЬЦАА ЭЗЭМШИГЧ ИРГЭН БҮРД 135 МЯНГАН ТӨГРӨГ ӨНӨӨДӨР ОЛГОНО WWW.MONTSAME.MN НИЙТЭЛСЭН:2024/12/20     ХУРИМТЛАЛЫН САНГИЙН ОРЛОГО 2040 ОНД 38 ИХ НАЯДАД ХҮРЭХ ТӨСӨӨЛӨЛ ГАРСАН WWW.NEWS.MN НИЙТЭЛСЭН:2024/12/20     “ЭРДЭНЭС ОЮУ ТОЛГОЙ” ХХК-ИАС ХЭРЛЭН ТООНО ТӨСЛИЙГ ӨМНӨГОВЬ АЙМАГТ ТАНИЛЦУУЛЛАА WWW.EAGLE.MN НИЙТЭЛСЭН:2024/12/20     Л.ОЮУН-ЭРДЭНЭ: ХУРИМТЛАЛЫН САНГААС НЭГ ИРГЭНД 135 МЯНГАН ТӨГРӨГИЙН ХАДГАЛАМЖ ҮҮСЛЭЭ WWW.EAGLE.MN НИЙТЭЛСЭН:2024/12/20     “ENTRÉE RESOURCES” 2 ЖИЛ ГАРУЙ ҮРГЭЛЖИЛСЭН АРБИТРЫН МАРГААНД ЯЛАЛТ БАЙГУУЛАВ WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2024/12/20     “ORANO MINING”-ИЙН ГЭРЭЭ БОЛОН ГАШУУНСУХАЙТ-ГАНЦМОД БООМТЫН ТӨСЛИЙН АСУУДЛААР ЗАСГИЙН ГАЗАР ХУРАЛДАЖ БАЙНА WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2024/12/20     АЖИЛЧДЫН САРЫН ГОЛЧ ЦАЛИН III УЛИРЛЫН БАЙДЛААР ₮2 САЯ ОРЧИМ БАЙНА WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2024/12/19     PROGRESSIVE EQUITY RESEARCH: 2025 ОН “PETRO MATAD” КОМПАНИД ЭЭЛТЭЙ БАЙХААР БАЙНА WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2024/12/19     2026 ОНЫГ ДУУСТАЛ ГАДААД АЖИЛТНЫ ТОО, ХУВЬ ХЭМЖЭЭГ ХЯЗГААРЛАХГҮЙ БАЙХ ХУУЛИЙН ТӨСӨЛ ӨРГӨН МЭДҮҮЛЭВ WWW.EAGLE.MN НИЙТЭЛСЭН:2024/12/19    

Category

Events

Events

Name organizer Where
MBCC “Doing Business with Mongolia seminar and Christmas Receptiom” Dec 10. 2024 London UK MBCCI London UK Goodman LLC

NEWS

64x64

China, Mongolia aim to stop spread of shared desert that threatens mining and agriculture on both sides www.scmp.com

China and Mongolia intend to renew their joint effort to stop the spread of dangerous desertification that poses a growing threat to mining and agriculture on both sides.
President Xi Jinping told his Mongolian counterpart, Ukhnaagiin Khurelsukh, in late November that China was ready to discuss establishing a “cooperation centre” to combat desertification, according to the Chinese foreign ministry.
And to that end, the two sides signed a “cooperation document”, the ministry said on its website.
The spread of arid land on the Mongolian side is caused by a combination of environmental and human factors, and most of its vast grasslands are vulnerable amid rising temperatures and decreased precipitation resulting from climate change.
The cooperation agreements reflect how the neighbouring countries will work together to restore degraded pasturelands and increase forest cover, Mongolia’s presidential foreign policy adviser, Odbayar Erdenetsogt, told the Post.
Both sides will also team up on research and in the deployment of “innovative technology” to prevent soil erosion, Erdenetsogt said on Wednesday.
Their cooperation centre will offer “professional and methodological assistance” in choosing trees and other plants that are best for degraded pasture land or land at risk of desertification, he added.
Cooperation is likely to create new forest coverage in Mongolia, with work to start as soon as possible, said Batshugar Enkhbayar, a Mongolian legislator.
The spread of deserts hurts agriculture by eroding topsoil that’s key to planting, said Ma Jun, founding director of the Institute of Public and Environmental Affairs, a non-governmental advocacy group in China. Overfarming and overgrazing of livestock are also partly to blame for the desertification, Ma added.
Massive sandstorm in northwest China plunges towns into darkness
Damaged land, in turn, produces little grass for livestock while leaving animals unprepared for extreme cold spells, which occur ever more often, the International Monetary Fund said in a 2019 report.
Unchecked mining can erode and contaminate soil. The overdrafting of groundwater and surface water may dry up whole lakes and leave a layer of alkaline dust, Ma said. And in turn, some of the changes in water supplies disrupt mining.
The two nations face an expanding desert on the Mongolian side, where climate change and mining are faulted for drying out vast tracts of land just north of the Chinese border. Dust storms and sandstorms from the deserts further complicate mining and snarl farm work. Some storms blow dust into Beijing, South Korea and farther east.
Sandstorms have decreased over the past four decades, but a pair in March 2021 reignited concerns, according to one China Meteorological Association study. In another sign of a drier climate, a forest fire that started in Russia burned about 600 metres along the Sino-Russian border five years ago.
“The degree of desertification has intensified, due to a chronic rise in temperature as well as the rapid growth of mining and grazing activities in Mongolia,” said Xu Tianchen, a China economist with the Economist Intelligence Unit in Beijing. “The expansion of deserts in Mongolia will further erode land that would otherwise be available for urban development and agriculture.”
In China, the vast north-central region of Inner Mongolia just south of the Mongolian border has about 61 million hectares (150 million acres) of desertified land, the official Xinhua reported in 2021.
Afforestation – the conversion of abandoned and degraded agricultural lands into forests – has raised Inner Mongolia’s tree coverage rate to 23 per cent, and its grassland coverage to 45 per cent, Xinhua said. Grazing is also banned on some 27 million hectares.
Reforestation efforts spanning about 40 years, along with curbs on grazing, have controlled desertification on the Chinese side, Xu said.
But in the nation of Mongolia, 76.8 per cent of land is “exposed to desertification” because of natural causes, “irresponsible mining” and the “misuse of pastures”, according to a 2020 International Journal of Environmental Research and Public Health study.
The study found a degradation of land due to an increase in livestock numbers, and it pointed to “natural climatic” factors and a “significant” increase in degraded land since 2010.
“It is safe to say that global warming has affected Mongolia in the past years,” Enkhbayar said, citing overall “drier” conditions in the country. Mongolia already counts the pre-existing, 1.3-million-sq-km (500,000 square miles) Gobi Desert as a third of its land mass.
The grazing of sheep, goats and other livestock employs one in four Mongolians. In Inner Mongolia, animal husbandry makes up 46 per cent of all agricultural and resource-extractive industries, which account for about 11 per cent of the regional economy.
The Mongolian government began cracking down on artisanal mining – also known as “ninja mining” – around 2010 because of the environmental damage it caused. Now the country needs “sustainable mining” to keep the core industry running without hurting the environment, Enkhbayar said.
Mongolia’s mines – the source of coal, copper and gold for much of the world’s top multinational mining companies – make up a quarter of its gross domestic product.
Other industries, including manufacturing, will shun newly formed deserts because of the costs to operate there, said Zhao Xijun, associate dean of the School of Finance at Renmin University in Beijing.
“Desertification makes it hard to use the soil for anything, including factories,” Zhao said. “It costs more to build there and transport food, water and so on.”
Chinese Premier Li Keqiang told a Mongolian official in October 2021 that he hoped to do more together toward curbing desertification, Xinhua reported at the time.
As China continues planting trees, 23% of the country is now covered in forest
The degree of damaged land in Mongolia, and a lack of resources in the relatively small, impoverished country, may have hampered any efforts so far to make good on the 2021 pledge, analysts say.
“They’re more constrained by the resources, and they do have a lot of mining going on,” Ma said.
China can offer Mongolia technical expertise and project financing to ease desertification, Xu said, adding that it should consider making investments that cut environmental impacts or that promote industries other than grazing and mining.
Chinese officials should share with Mongolia their own experience that dates back decades, Zhao said. He noted how China has experience with tree-planting, how it left tracts of farmland fallow for 20-plus years to avoid soil depletion, and how it relocated people who live in the emerging deserts.
In 2021, Mongolia began a national effort to plant 1 billion trees by 2030 to fight deforestation and climate change.
“In past decades, China has made progress, although mostly within its own border,” Xu said. “Efforts on the Mongolian side has been limited by the expanse and severity of land degradation, which presents an outsized challenge and requires multilateral collaboration.”
By Ralph Jennings
Ralph Jennings joined the Politcal Economy desk as a Senior Reporter in August 2022 having worked as a freelancer since 2011. Ralph previously worked for Thomson Reuters in Taipei and for local newspapers in California. He graduated from University of California, Berkeley with a bachelor’s degree in mass communication.
...


64x64

Mongolia's foreign trade up 27 pct in first 11 months www.xinhuanet.com

Mongolia saw its foreign trade turnover grow 26.6 percent year on year to 19 billion U.S. dollars in the first 11 months of this year, local media reported on Saturday, citing the Mongolian Customs General Administration (MCGA).
Mongolia registered a surplus in foreign trade balance as exports exceeded imports by around 3.2 billion dollars, with mining products accounting for the majority of the mineral-rich country's total exports in the January-November period, the MCGA data showed.
During the period, China remained Mongolia's top export destination, with its major imports including mining and agricultural products, according to the MCGA.
...


64x64

53 coronavirus cases recorded in Mongolia in past 24h www.akipress.com

53 new coronavirus cases were recorded in Mongolia in past 24 hours.
24 of them were contacts in Ulaanbaatar, and 29 were registered in the regions. No imported cases were found.
The number of COVID-19 related deaths remained 2,135.
...


64x64

Mongolian government offers more concessions on probe into coal mafia said to have embezzled billions www.intellinews.com

The sixth day of the Mongolian street protests against the “coal mafia”, a group of state officials and executives who have apparently robbed the public purse of billions of dollars, also brought more concessions from the government in terms of investigating the affair.
As protesters again on December 9 gathered in front of Government Palace in Ulaanbaatar to demand accountability, the government announced that it would start giving daily briefings on the coal theft scandal. The Cabinet secretariat, meanwhile, said nine contracts related to the state mining company at the heart of the affair, Erdenes Tavan Tolgoi (ETT), would be declassified and made public. Henceforth, the government would not enter into any non-public agreements on coal export sales, officials also pledged. The confidentiality of non-disclosure agreements (NDA) would be terminated.
The secretariat also announced that parliament will form a temporary committee to probe the coal theft case.
Statements from the secretariat also alluded to claims that the protests—which on December 8 led to some instances of traffic flows in central Ulaanbaatar being obstructed—were incited by political and business groups who were involved in the coal mafia. "The government will continue to fight these thugs," the secretariat said.
Most of those who will be investigated in relation to the thieved coal and related earnings on coal exports to China are Mongolian customs officials. Among those officials is Asralt Batbold, head of the General Directorate of Customs, who, shortly after acknowledging the allegations, resigned from his post.
It is unclear if any of the nine contracts dated from 2019 to 2022 implicate any of the companies involved with ETT in terms of missing coal and coal export monies. Nonetheless, these contracts will be turned over to the National Audit Office for further investigation, while conflict of interest issues are to be verified and transferred to the temporary parliamentary committee.
The contracts were signed based on recommendations in June 2019 of the National Security Council (NSC), which consisted of former president Battulga Khaltmaa, Speaker of the Parliament Zandanshatar Gombojav, and former prime minister and current president Khurelsukh Ukhnaa.
One shocking revelation is that former MP Enkhbold Luvsan raised the coal theft case in parliament as far back as 2018.
On December 8, Enkhbold provided in-depth details about the affair to local TV station TV8. He said that he first discovered information when attempting to help a former customs official avoid prison time. This customs whistleblower was eventually sentenced to two and a half years in prison, while trying to make the coal scandal public.
Enkhbold recounted that when he raised the issue in parliament four years ago, he encountered opposition from within his own party, the Mongolian People's Party (MPP).
One established claim in the affair is that when 379,000 tonnes of coal went missing in 2010-2011, inspectors at the time determined that 3,758 coal haul trucks were registered as "empty" at customs.
Enkhbold also told how, when he was a member of parliament in 2016 and a member of the parliamentary standing committee on justice in 2017, he asked the prosecutor general about the claimed coal theft, but the prosecuter general replied: "It [the case] is closed because the statute of limitations has expired."
Nyambaatar Khishgee, the Justice and Internal Affairs Minister, gave a briefing on some details of the coal theft and how law enforcement would proceed with its investigation. The statute of limitations will be lifted in all cases related to the coal theft, with investigators to primarily look into discrepancies between local and foreign customs data, said Nyambaatar.
By Anand Tumurtogoo in Ulaanbaatar
...


64x64

Ulaanbaatar Railway Run its First Export Freight Train www.montsame.mn

The freight train starts transporting export goods and products to China on December 9. The train which brought import goods departed to deliver export goods to China.
The ceremony of this first export train departure was held at the Central Station of Ulaanbaatar Railway, where the leadership of the Ulaanbaatar Railway (UB Railway) JVC participated and sent off the machinists of the export train. The first vice chief officer of the UB Railway JVC, I. V. Milostnykh, who participated in the ceremony, emphasized that this year marks the 70th anniversary of the establishment of the Transportation Control Department of the UB Railway and said naming today’s export train after the anniversary.
The head of the Transport Control Department of UB Railway, M. Tsogt, explained the cause of the first convoy of the export train. He stated that 95 percent of the containers loaded with imported goods from China were returned empty. Therefore, the two sides had several discussions on the issue for quite a long time and agreed to send back the containers with export goods. In this regard, all the empty train containers were collected in one of the terminals of the logistics center of Amgalan railway station in Ulaanbaatar to be loaded with the export goods.
Eventually, 4-5 trains per month, each with at least 50 wagons and containers, will transport value-added agricultural export products and mining and mineral resources.
The new export train weighs 3,440 tons of 70 containers and 70 wagons loaded with agricultural products such as wool, oleo oil, pine nuts, bran, and rapeseed. As a result, MNT 57.3 million was earned from one train, export freight transportation was increased 2.4 times, and the freight profit of the railways was increased. The uniqueness of this export train is that it supports our country’s manufacturers and entrepreneurs, according to UB Railway JVC’s management.
The head of the Transport Control Department of UB Railway, M. Tsogt, also stated that export trains with containers loaded with goods and products from our country would be sent once a week. He highlighted that at the same time, our country is starting a new transport by sending an export train to the southern neighbor and handing over the 2022nd freight train passing through our country from the People’s Republic of China to the Russian Federation at the Sukhbaatar railway station.
...


64x64

Mongolia grabs 20 medals at Asian Classic Powerlifting Championship 2022 www.montsame.mn

The athletes from Mongolia won 10 gold, 6 silver, and 4 bronze medals at the Asian Classic Powerlifting Championship 2022, which took place in Dubai, United Arab Emirates on December 2-8, 2022. Twelve athletes from Mongolia competed in the championships and two of them became Asian Champions.
To summarize the achievements of the athletes who participated in the competition:
Ts. Bayarkhuu lifted a total of 590 kg and became Asian Champion by winning the 3 gold and 1 silver in the men`s +120 kg weight class of the masters-2 category.
B. Orkhon also ranked first at the Asian Classic Powerlifting Championship 2022 by winning 3 gold and 1 silver in the women`s -84 kg weight class of the sub-junior category.
Kh. Amarsanaa ranked second at the championship by grabbing the 2 gold and 3 silver in the men`s -74 kg weight class of the masters-2 category.
S. Minjnaatar ranked third at the championship by claiming silver and bronze medals in the men`s - 105 kg weight class of the open category.
B. Batkhishig won the gold medal by benching in the women`s 75 kg weight class of the junior category.
P. Enkhnasan won the gold medal by benching in the men`s – 105 kg weight class of the masters-1 category.
B. Amartsengel claimed two bronze medals by benching and deadlifting in the women`s -69 kg weight class of the open category.
A. Tserensodnom won a bronze medal by benching in the men`s – 74 kg weight class of the masters-1 category.
The championship comprises three powerlifting categories, namely squat, bench press, and dead-lifting. Over 600 athletes from 29 Asian countries competed in the tournament.
...


64x64

Mongolia raises Personal Income Taxes www.news.mn

On November 11, 2022, the Parliament approved the Law on Amendments to the Personal Income Tax Law. The new law will be enforced from January 1, 2023. Therefore, Mongolians will pay
-10 percent taxes if he/she earns up to MNT 120 million a year,
-15 percent taxes from taxable income up to MNT 180 million a year,
-20 percent taxes if their taxable income exceeds MNT 180 million a year
In Mongolia, there are 57 citizens who earn more than MNT one billion per year. According to the amendments to the Law, taxes will be increased for only 1,300 citizens.
...


64x64

Mongolia arrests ex-head of state mining company after corruption protests www.aa.com.tr

Rocked by protests over allegations of corruption in its coal trade with China, Mongolia on Thursday announced the arrest of the former head of its state-owned mining company.
Battulga Ganhuyag, ex-CEO of Erdenes Tavantolgoi JSC, was among eight people arrested in raids on Wednesday night, said Interior Minister Khishgee Nyambaatar.
Their offices and homes are also being searched as part of ongoing investigations, he told reporters at a news briefing, according to a report by state news agency Montsame.
Several hundred people braved freezing temperatures in the capital Ulaanbaatar to protest against corruption in the coal industry and the country’s ailing economy, with some trying to storm government buildings on Sunday.
Nyambaatar said a working group formed to support investigations into accusations of corruption in the coal industry held its first meeting on Wednesday evening.
He said the working group includes specialists and will “urgently collect necessary information from government agencies.”
It will also be “responsible for obtaining information on border customs from foreign countries,” he said.
Nyambaatar added that authorities have reopened probes into “four previous cases of unregistered coal transportation.”
 
 
 
...


64x64

Air pollution slowly killing Mongolian children www.news.mn

On 1 December, Ulaanbaatar’s Air Quality Index was 169, showing air pollution levels with a particulate matter (PM) 2.5 concentration 18 times the World Health Organization (WHO) recommended level. It has remained well into unhealthy levels through 7 December.
Ulaanbaatar is the coldest capital city in the world. Nighttime temperatures falls below -40 degrees Celsius. Some 200 thousand people living in gers, traditional Mongolian yurts belonging mostly to migrants from the countryside, burn raw coal for heat as they do not have access to the central electricity grid of the capital. This practice has been identified as the main cause of Ulaanbaatar’s air pollution.
The city is located in the narrow valley of the Bogd mountain on the Tuul river. This geography creates a thermal inversion layer above the city, which traps its toxic air. With colder weather conditions expected in January and February, PM2.5 concentrations in the Mongolian capital could be up to 40 times higher than the WHO standard.
The toxicity of Ulaanbaatar’s winter air has very serious health implications for its population, particularly for children. Pneumonia is the second leading cause of death for children under 5, and children in Ulaanbaatar have 40 percent lower lung functioning capacity than children in rural areas of the country. Air pollution has also been strongly correlated with a decrease in delivered-infant conception rates during the winter months, demonstrating overall negative effects on reproductive health.
In May 2019, for the first time in history, the government implemented a ban on raw coal use. Instead, the government provided a form of processed coal product called briquettes, which burn for longer and don’t release fumes. (Source: Diplomat)
...


64x64

Rio Tinto plays chancy round of Mongolian roulette www.reuters.com

LONDON, Dec 7 (Reuters Breakingviews) - December 9 is shaping up to be a big day for Jakob Stausholm. Just ahead of his two-year anniversary as Rio Tinto’s (RIO.L) chief executive, he will learn the fate of the mining giant’s tortuous efforts to buy out minority investors in Turquoise Hill Resources (TRQ.TO), the majority owner of a flagship project in Mongolia. Success would give the growth strategy a real boost; failure could mean senior heads roll.
Oyu Tolgoi, a $10 billion copper and gold mine near the Chinese border, is an epic saga dating back more than a decade. When it eventually scales up, it will be the world’s fourth largest excavator of the red metal. It has long been saddled with an unwieldy corporate structure, which involves Mongolia controlling 34% and Canada-listed Turquoise Hill, in which Rio holds a majority stake, owning the rest.
Cleaning up that structure prompted Stausholm to take two expensive steps. With Mongolia’s entire GDP a mere $15 billion, the country’s equity stake was only made possible by over $2 billion of historic loans owed to Turquoise Hill. The costs of repaying that debt and the accrued interest meant Ulaanbaatar stood to wait decades before receiving dividends from its own project. To stem political blowback regarding Rio’s alleged poor performance as the mine’s operator, Stausholm agreed a year ago to write off that debt.
Buying out the Turquoise Hill minority shareholders is Stausholm’s other initiative. Rio’s 51% ownership means it already consolidates $4 billion of the related Oyu Tolgoi debt onto its balance sheet. A successful deal would allow it to keep more of the earnings and increase Rio’s global copper production by 50% to around 900,000 tonnes by 2028. It also would be a way to rid Rio of similar complaints about its operational performance from the minority shareholders.
The process has been a shambles. Before Stausholm’s first offer in March, Turquoise Hill shares had been trading around C$25 ($18.35) apiece, valuing the equity at $3.7 billion. Some owners, including Pentwater Capital Management, which now holds a 15% stake, spurned the initial 36% premium. They also dismissed a sweetened C$40 bid. Even when Rio divulged its final offer of C$43 a share in September, valuing the company at $6.7 billion, Pentwater and another refusenik, SailingStone Capital, demurred. Determining the fair value has multiple answers, but the dissenters have come close to reaching the simple majority of non-Rio shareholders needed to block the deal.
Then things got really silly. In desperation, Stausholm deployed a peculiarity of Canadian securities law allowing Pentwater and SailingStone to have their Turquoise Hill valuations determined by an arbitration process, in return for sitting out the vote. While it wasn’t certain that process would award them much more, other shareholders feared the risk of an exclusive sweetheart deal was too great. Canadian regulators decided to investigate, which delayed the ballot yet again. On Nov. 18, Rio reversed course and scrapped the whole side deal.
Stausholm looks somewhat foolish, but he is not in a hopeless position. Arguably, the minority shareholders will have to accept the C$43. If they don’t, the shares could fall back to C$25. Considering that pure-play mining stocks such as First Quantum Minerals (FM.TO) and the copper price itself have both retreated by 15% since March, Turquoise Hill’s stock price might even drop to around C$20.
The Rio boss also has a stick, however. Due to cost overruns and delays, Oyu Tolgoi faces a funding gap exceeding $3.6 billion. Regardless of what happens at the ballot box, Stausholm will need money to get the project back on track. One way to do so is with a rights issue, which gives Stausholm the chance to kill two birds with one stone.
Imagine minority shareholders vote down the offer, but Rio then has Turquoise Hill issue fresh equity. Extending the due date on a chunk of its debt while raising, say, half the funding gap in shares at a 40% discount to Turquoise Hill’s current C$42 price would dilute Pentwater from 15% to 10%, on Breakingviews calculations. The viability of renegotiating the borrowing terms is controversial, however. If Rio had to raise the full $3.6 billion at a shrunken C$20 a share and Pentwater once again declined to participate, its stake would slump to 5%.
Given the buyout mess, Stausholm may regret not opting for a rights issue at the onset. It was always apparent Pentwater might have Rio over a barrel. The battle has damaged Rio’s board. With minimal net debt, the miner had enough cash to buy more Turquoise Hill equity.
Even so, it’s easy to see why Stausholm took a chance. Acquiring the other 49% of Turquoise Hill is the only way to truly simplify Oyu Tolgoi. If the roster of pesky investors simply sold their rights, Rio might have wound up with even more difficult partners, while still having to deal with an independent board.
Those factors may save the Rio CEO if he loses the takeover vote, but a failed buyout could still put pressure on Bold Baatar, the head of copper. He played a key role in negotiating the recent deal with the Mongolian government. At the same time, in a potential sign of where the blame might fall, only Baatar was included in the company’s Nov. 18 press release ending the ill-fated side deal with investors, whereas Stausholm appeared alongside Baatar in the September offer announcement.
The wider lesson is not that developing-world mining projects are fraught with difficulty; they are what big miners like Rio do. Rather, the episode illustrates the need for a leader with the wits and the gall for roulette. Rio shareholders soon will see just how well Stausholm plays.
Follow @gfhay and @karenkkwok on Twitter
 
 
 
...


  • Terms of Reference
  • About
  • Contact Us

Managed by: B2BMongolia www.b2bmongolia.com

Events

News

Facebook